Explorers ready to spud Slope shale well

  • (Photo via 88 Energy video of Icewine exploration project)

A small exploration partnership is prepping to drill a second well in the coming weeks into a shale prospect in a little-explored portion of the North Slope.

Australian-based 88 Energy Ltd. announced in a March 21 release that Doyon Drilling Inc.’s Arctic Fox drilling rig had reached the Franklin Bluffs gravel pad, putting the company on schedule to spud the Icewine-2 appraisal well in April.

88 Energy is the majority owner in its partnership with Houston-based Burgundy Xploration; they operate under Accumulate Energy, which is an 88 Energy subsidiary.

The joint venture drilled the Icewine-1 well in late 2015, the results of which inspired a seismic survey early last year. 88 Energy has said the companies also hold two highly prospective conventional oil plays based on the seismic data that need much more evaluation within their acreage.

The Franklin Bluffs drilling pad, also the location for the first Icewine well, is about 35 miles south of existing North Slope fields. Its location adjacent to the Dalton Highway-trans-Alaska pipeline corridor makes it accessible year-round, a rare feature among Slope exploration projects that often require ice roads and winter-only drilling on undeveloped land.

The Icewine-2 well is focused on appraising the unconventional resource in the HRZ shale, which 88 Energy describes as “a prolific source rock” in the Brookian geologic formation.

“We are now entering an exciting phase of evaluation at Project Icewine as we seek to establish the production potential of the HRZ shale,” 88 Energy Managing Director Dave Wall said in the March 21 release.

The company plans to stimulate and flow test the well in June and July.

DeGoyler and MacNaughton, an international resource appraisal firm estimated the unconventional Icewine prospect to contain about 980 million barrels of recoverable oil and natural gas condensate liquids — about 200 million barrels of which is oil, according to 88 Energy.

Intra-company estimates have put the recoverable liquids total significantly higher.

Alaska’s massive conventional oil fields are a strong indication that shale prospects nearby should be on the same scale Burgundy CEO Paul Basinski has said.

Additionally, the results from the Icewine-1 well indicate a high-pressure reservoir with good permeability, porosity and low viscosity oil compared to many Lower 48 shale fields, according to 88 Energy, all of which add up to better oil recovery.

Another small explorer, independent Anchorage-based Great Bear Petroleum is investigating shale prospects just north of Icewine.

Icewine-1 cost about $17 million, and 88 Energy notes in its latest investor release that the State of Alaska offers “generous exploration incentives” providing explorers cash refunds on up to 35 percent of their operating losses.

Alaska legislators have generally come to the bipartisan conclusion that the state will pretty much end its refundable tax credit program for the North Slope after 2017 as a way to reduce state expenses while Alaska is in a period of large budget deficits.

88 and Burgundy together hold about 270,000 acres of state leases on the southern North Slope. That acreage total should increase to about 690,000 continuous acres if the all of the lease rights the companies won in the state’s December 2016 North Slope lease sale are finalized and transferred.

Elwood Brehmer can be reached at [email protected].

03/24/2017 - 9:52am